Wells Fargo Lawsuit Highlights Need for Accurate Background Checks

Wells Fargo Lawsuit Highlights Need for Accurate Background Checks

Did the background check you ran tell the truth?

Background checks are crucial to any hiring process; they protect you, your employees, and your applicants. But just as important as the background check is the accuracy of that check, as Wells Fargo is learning the hard way due to a new lawsuit.

Bad Data, Bad Decisions

The root of the issue is an application filed by Steve-Ann Muir of New Jersey. Muir filed an application for a customer service position with the company, which has a fairly standard background check procedure. She provided the necessary information and agreed to the check. It was what happened next that sparked the suit.

When Muir’s background check came back, it included a statement that she’d been terminated from Bank of America due to internal fraud. The data came from Early Warning Services, or EWS,, a company that specializes in collecting data on employees for financial firms and offers a product called the Internal Fraud Protection Service. The issue appears to be two-fold; one, Muir was never informed of any such accusation and was simply fired from her Bank of America role, and two, that Wells Fargo failed to inform her of why her application was rejected or give her any attempt to change it.

There’s some question as to the legality of Muir’s claim. She alleges that Wells Fargo violated the Fair Credit Reporting Act, which requires employers to inform applicants of problems so that the applicant can look at their background check and address errors. But it’s not clear that the products offered by EWS fall under that law, nor is it clear what Wells Fargo’s obligations would be for proprietary products.

That said, the damage is done. The company will be going to court to defend themselves against a suit that Muir is looking to turn into a class-action. Wells Fargo will potentially lose millions, all because of one line of bad data. So how can you protect yourself?

background-checks2-1The form doesn’t guarantee results.

Getting Better Data

First and foremost, use common sense. Wells Fargo wouldn’t be in this situation if they had asked themselves about the potential for mistakes from a service that collects proprietary data that can’t be easily double-checked. It’s fairly clear that even if Muir did, in fact, commit internal fraud, the investigation wasn’t properly handled. This could turn out to be anything from a spiteful co-worker to a clerical error, none of which you want to base your hiring decisions on.

Any well-run background check company will closely examine public records that can easily be verified independently, and won’t rely on hearsay or rumor. There are checks that will collect this data, but it’ll be clearly marked and you’ll have the tools you need to properly evaluate your candidates.

Finally, a good company will make sure you understand your rights and responsibilities. They’ll provide you with FCRA training and materials, so you know how to treat your applicants fairly, and they’ll help you with your hiring process so if you do have to take an adverse action, you’ve got your legal bases covered.

Background checks are crucial tools. But a tool is only as good as its construction, so use the right data. Request a free background check trial and get the best information.

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